How to Select Remodeling Materials to Maximize Your Resale Profit

If you invest in real estate, your eye should always be on the ROI. Choosing the right materials to remodel a distressed property is key to ensuring that you get the ROI that you are hoping for. If you are new to real estate investing (house flipping) you may make some novice mistakes when it comes to choosing your materials. Learn more about how to avoid picking materials that will put a dent in your profits and how to choose materials that will give you the best return.

Overpaying for Luxe Materials

There are some common misconceptions about paying extra for luxury-type materials. It would stand to reason that if you pay more for the materials, then you could charge more for the house. The fact is, many seasoned real estate investors have found out the hard way that you can easily overprice yourself right out of the market.

Here is an exaggerated example. You want to add some bling to the master bath so you choose 24k gold faucets and fixtures. Gold is sold by the troy ounce (31.1034768 grams), which has a greater volume than the avoirdupois ounce (28.5 grams) and can range in value depending on the market. The price you pay today may not be what it is valued when you go to sell the home. More importantly, this unique measurement can cause confusion and result in overpaying.

Of course, buying gold fixtures is extreme, but the same can be true for other materials. There is a balance when you are investing in materials for a remodel. Mid-range priced materials are a much better option. Overspending on luxe materials comes with a real risk factor. Mid-range is always best.

Have the Right Tools on Hand and Buy in Bulk to Save

If you know that there are going to be two or three projects that are going to require chemical grout over the next few months, investing in TAM pipes will make the job easier. A TAM pipe (tube-a-manchette) delivers grout easily. Having the right tools on hand is essential to getting a project done quickly.

Investing in tools early on in your real estate investing career is a good investment, especially, if your plan is to DIY a lot of the remodeling work. Over time, the tools will pay for themselves and you will be prepared to do any type of remodeling work.

Time is money. The quicker you can get a project done, the better off you will be financially. Buying materials in bulk that you know you will use on just about every project, like joint compound for repairs, is another way to save.

Other things to buy in bulk include nails, screws, paint, paint materials, and you can even buy flooring materials in bulk. You can realize substantial savings by buying in bulk, which of course translates into a higher return when you sell the property.

Plan Ahead by Keeping Your Eye on the Market

As a real estate investor you are likely keeping your eye on the real estate market all the time, but you need to look a little beyond your local market. The global market, and the stock market are also something you should be watching, because both will affect the cost of materials.

In 2020, trading volume overseas fell by about 9.5%. The total drop in global trading decreased by 16%. What does this mean to a house flipper? It means during that period the cost of materials likely skyrocketed. How do you manage that scenario to protect your investment and ensure a hefty ROI? Planning.

Keep your eye on global trading trends. A large majority of home remodeling materials are imported from overseas locations. Buy materials when the market is trading robustly and store them until you need to use them. When the market is sluggish hold off if you can. Planning and watching the trends will help you to get the best returns on material investments.

Keeping the cost of materials down without sacrificing quality can be a challenge but it is essential to ensuring that you get the return that you expect when you resell. Find the balance and you will improve your returns.